Financial Planner, Investment Adviser, Financial Adviser, Wealth Manager, Financial Counselor, Money Nerd...These are just a very small handful of the myriad names someone might take on in the pursuit of helping people understand their money (or lack thereof).
I didn't grow up just dying to become someone that helps people understand money. In fact, quite the opposite. Like many people, I feel I sort of fell into my career. That is, my passion to help people took hold and ushered me where I am today.
I could go on and on about the many differences of those who hold out their shingle as one of the titles mentioned above (or one of the many others). However, there has been plenty written on that topic elsewhere already.
My point for this post is to simply let you know what drives me crazy about the industry I call home.
First, I can't stand excessive fees that cost people more than it should to get the job done. PBS Frontline developed a fabulous documentary which focuses on this very topic within the 401(k) plan arena (http://video.pbs.org/video/2365000843/). I HIGHLY recommend watching it! I simply cannot believe the way high-level execs of companies like JP Morgan Chase and Prudential responded to questions in the program. Sadly, I've seen many "portfolios" from unhappy clients of well known firms that charge one percent or more for "wealth management" PLUS additional fees (seen as high as 10%) stemming from their recommended funds! All of this while stating something like, "we give you free financial planning."
Second, I simply cannot tolerate smoke and mirrors. I hate it when so-called "advisers" mask horrible, costly and downright wrong advice under the auspices of mere warm-and-fuzzy schmooziness (all technical terms, might I add). I once worked for someone who told me, "Jason, you're too ethical." REALLY? I find that an incredibly nice compliment but how can someone be too ethical - especially within the financial industry? This isn't long after he gloated to me about the $40,000 commission he made on ONE annuity sale!
Third, I hate it when people pay a financial adviser, wealth manager, and the like (at a high premium, I might add), though they are still walking around, rather aimlessly, with unanswered questions and concerns. It's no wonder why a good majority of clients are thinking about firing their adviser.
I could go on. To me, the value of paying (a reasonable amount) for financial planning and an appropriate adviser is simply the objectivity, coaching and accountability that comes with the relationship. Those critical ingredients, mixed in with solid and effective technical expertise, equals quite a vehicle for developing some serious wealth.
Investing is just one small piece of the puzzle. Be wary of those who either do nothing but focus on investments/products or seemingly gloss over the other topics like spending planning, goals, taxes, estate planning, etc. Also, be careful if you feel like you need to hire an attorney prior to engaging in an advisory relationship! You should be able to understand what you are signing before you do so!
We're not in the 80's and 90's any longer. If you have money to invest, you can craft a solid portfolio and even have it quite effectively managed by technology for a fraction of what a high-cost broker or active manager will charge. Don't be led astray. Know what you are paying (down to the penny) and exactly why you are paying it. In my opinion, anything short of that points to the strong possibility you are getting ripped off.
